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Huron Announces Third Quarter 2021 Financial Results and Updates 2021 Guidance

THIRD QUARTER 2021 HIGHLIGHTS

  • Revenues increased $18.7 million, or 9.1%, to $224.0 million in Q3 2021 from $205.3 million in Q3 2020.
  • Net income from continuing operations increased $2.6 million, or 23.8%, to $13.7 million in Q3 2021 from $11.1 million in Q3 2020.
  • Adjusted EBITDA(8), a non-GAAP measure, increased $2.8 million, or 12.0% to $26.4 million in Q3 2021 from $23.6 million in Q3 2020.
  • Diluted earnings per share from continuing operations increased $0.14, or 28.0%, to $0.64 in Q3 2021 from $0.50 in Q3 2020.
  • Adjusted diluted earnings per share from continuing operations(8), a non-GAAP measure, increased $0.19, or 32.2%, to $0.78 in Q3 2021 from $0.59 in Q3 2020.

YEAR-TO-DATE 2021 HIGHLIGHTS AND 2021 GUIDANCE

  • Revenues increased $11.6 million, or 1.8%, to $657.3 million for the first nine months of 2021 compared to $645.8 million for the same prior year period.
  • Net income from continuing operations was $31.9 million for the first nine months of 2021 compared to a net loss from continuing operations of $17.6 million for the same prior year period, which includes non-cash pretax goodwill impairment charges of $59.8 million incurred in Q1 2020 related to the company's Strategy and Innovation and Life Sciences reporting units within the Business Advisory segment.
  • Adjusted EBITDA(8), a non-GAAP measure, was $68.5 million for the first nine months of 2021 compared to $70.1 million for the same prior year period.
  • Diluted earnings per share from continuing operations was $1.46 for the first nine months of 2021 compared to diluted loss per share from continuing operations of $0.81 for the same prior year period.
  • Adjusted diluted earnings per share from continuing operations(8), a non-GAAP measure, increased $0.11, or 6.5%, to $1.81 for the first nine months of 2021 from $1.70 for the same prior year period.
  • Huron updates full year 2021 guidance, including narrowing revenue expectations to a range of $885.0 million to $905.0 million.

Global professional services firm Huron (NASDAQ: HURN) today announced financial results from continuing operations for the third quarter ended September 30, 2021.

“I am pleased to report third quarter revenues grew 9% over last year, driven by growth across all three of our operating segments,” said James H. Roth, chief executive officer, Huron. “The business advisory segment maintained its momentum, primarily driven by growth in the commercial industries, while our healthcare and education segments continued their trajectory to pre-pandemic growth levels. Our digital, technology and analytics offerings, inclusive of services and products, accounted for approximately 40% of total companywide revenue through the first nine months of 2021. We believe our technology-related capabilities will continue to play a critical role in our future growth.”

COVID-19 IMPACT

The worldwide spread of the coronavirus (COVID-19) has created significant volatility, uncertainty and disruption to the global economy. The company continues to closely monitor the impact of the pandemic on all aspects of its business, including how it will impact its clients, employees and business partners. In most of 2020 and the first quarter of 2021, the COVID-19 pandemic negatively impacted sales and elongated the sales cycle for new opportunities for certain services, particularly within the company's Healthcare and Education segments as some clients reprioritized or delayed certain projects. Conversely, the pandemic strengthened demand for the company's cloud-based technology and analytics solutions and certain services provided to organizations in transition within the company's Business Advisory segment.

During the second and third quarters of 2021, the company saw an increase in its sales pipeline and the pace of signings, particularly within its Healthcare and Education businesses. While overall demand for services in the first quarter of 2021 was negatively impacted by the COVID-19 pandemic, the overall demand for the company's services strengthened in the second and third quarters of 2021 and the company expects strong revenue growth in the fourth quarter of 2021 compared to the fourth quarter of 2020.

Huron continues to prioritize the health and safety of its people and its clients. As of November 2, 2021, over 92% of the company’s U.S.-based employees are vaccinated.

SALE OF LIFE SCIENCES BUSINESS

On November 1, 2021, the company completed the divestiture of its Life Sciences commercial and R&D strategy, pricing and market access strategy business (the "Life Sciences Business") to Oliver Wyman. The sale of the Life Sciences Business did not have a significant impact on the company's full year 2021 guidance for revenue, adjusted EBITDA margin or adjusted EPS. For the three and nine months ended September 30, 2021, the Life Sciences business generated revenues of $5.1 million and $14.8 million, respectively.

THIRD QUARTER 2021 RESULTS FROM CONTINUING OPERATIONS

Revenues increased $18.7 million, or 9.1%, to $224.0 million for the third quarter of 2021 compared to $205.3 million for the third quarter of 2020.

Net income from continuing operations increased $2.6 million, or 23.8%, to $13.7 million for the third quarter of 2021, compared to $11.1 million for the same quarter last year. Diluted earnings per share from continuing operations increased $0.14, or 28.0%, to $0.64 for the third quarter of 2021, compared to $0.50 for the third quarter of 2020.

Third quarter 2021 earnings before interest, taxes, depreciation and amortization ("EBITDA")(8) increased $1.2 million, or 5.0%, to $24.4 million compared to $23.3 million in the same prior year period.

In addition to using EBITDA to evaluate the company’s financial performance, management uses other non-GAAP financial measures, which exclude the effect of the following items (in thousands):

 

Three Months Ended

September 30,

 

2021

 

2020

Amortization of intangible assets

$

2,235

 

 

$

3,155

 

Restructuring and other charges

$

1,677

 

 

$

59

 

Litigation and other losses

$

56

 

 

$

 

Transaction-related expenses

$

194

 

 

$

437

 

Tax effect of adjustments

$

(1,103

)

 

$

(1,692

)

Foreign currency transaction losses (gains), net

$

43

 

 

$

(194 

)

Adjusted EBITDA(8) increased $2.8 million, or 12.0%, to $26.4 million, or 11.8% of revenues, in the third quarter of 2021, from $23.6 million, or 11.5% of revenues, in the same quarter last year. Adjusted net income from continuing operations(8) increased $3.7 million to $16.8 million, or $0.78 per diluted share, for the third quarter of 2021, from $13.0 million, or $0.59 per diluted share, for the quarter in 2020.

The average number of billable consultants(2) increased 5.0% to 2,722 in the third quarter of 2021 from 2,592 in the same quarter last year. Billable consultant utilization rate(3) was 72.2% during the third quarter of 2021 compared to 70.4% during the same period last year. Average billing rate per hour for our billable consultants(4) was $200 for the third quarter of both 2021 and 2020. The average number of full-time equivalent professionals(6) was 257 in the third quarter of 2021 compared to 272 for the same period in 2020. The average number of Healthcare Managed Services employees(7) was 485 in the third quarter of 2021 compared to 88 for the same period in 2020. This operating data has been revised from previously reported amounts as the company began assessing its operating performance by the following three employee types in the second quarter of 2021: billable consultants, full-time equivalents, and Healthcare Managed Services employees.

YEAR-TO-DATE 2021 RESULTS FROM CONTINUING OPERATIONS

Revenues increased $11.6 million, or 1.8%, to $657.3 million for the first nine months of 2021 compared to $645.8 million for the first nine months of 2020.

Net income from continuing operations was $31.9 million for the first nine months of 2021, compared to a net loss from continuing operations of $17.6 million for the first nine months of 2020. Diluted earnings per share from continuing operations was $1.46 for the first nine months of 2021, compared to diluted loss per share from continuing operations of $0.81 for the first nine months of 2020. Results for the first nine months of 2020 reflect non-cash pretax charges totaling $59.8 million to reduce the carrying value of goodwill in the company's Strategy and Innovation and Life Sciences reporting units within the Business Advisory segment.

EBITDA(8) increased $57.5 million, to $64.5 million for the first nine months of 2021, from $7.0 million for the same prior year period.

In addition to using EBITDA to evaluate the company’s financial performance, management uses other non-GAAP financial measures, which exclude the effect of the following items (in thousands):

 

Nine Months Ended

September 30,

 

2021

 

2020

Amortization of intangible assets

$

6,923

 

 

$

9,558

 

Restructuring and other charges

$

3,166

 

 

$

2,626

 

Litigation and other losses (gains), net

$

98

 

 

$

(150

)

Goodwill impairment charges

$

 

 

$

59,816

 

Loss on sale of business

$

 

 

$

102

 

Transaction-related expenses

$

335

 

 

$

437

 

Tax effect of adjustments

$

(2,788

)

 

$

(17,041

)

Foreign currency transaction losses, net

$

398

$

245 

 

Adjusted EBITDA(8) was $68.5 million, or 10.4% of revenues, for the first nine months of 2021 compared to $70.1 million, or 10.8% of revenues, for the first nine months of 2020. Adjusted net income from continuing operations(8) increased $1.9 million to $39.7 million, or $1.81 per diluted share, for the first nine months of 2021 from $37.7 million, or $1.70 per diluted share, for the first nine months of 2020.

The average number of billable consultants(2) increased 2.6% to 2,660 for the first nine months of 2021 from 2,592 for the same prior year period. Billable consultant utilization rate(3) was 71.5% during the first nine months of both 2021 and 2020. Average billing rate per hour for billable consultants(4) was $201 for the first nine months of both 2021 and 2020. The average number of full-time equivalent professionals(6) was 245 for the first nine months of 2021 compared to 271 for the same prior year period. The average number of Healthcare Managed Services employees(7) was 342 for the first nine months of 2021 compared to 91 for the same period in 2020. This operating data has been revised from previously reported amounts as the company began assessing its operating performance by the following three employee types in the second quarter of 2021: billable consultants, full-time equivalents, and Healthcare Managed Services employees.

OPERATING SEGMENTS

Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges.

The company’s year-to-date 2021 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (42%); Business Advisory (33%); and Education (25%). Financial results by segment are included in the attached schedules and in Huron's forthcoming Quarterly Report on Form 10-Q filing for the quarter ended September 30, 2021.

OUTLOOK FOR 2021

Based on currently available information, the company narrowed guidance for full year 2021 revenues before reimbursable expenses in a range of $885.0 million to $905.0 million. The company anticipates adjusted EBITDA as a percentage of revenues in a range of 10.8% to 11.3% and non-GAAP adjusted diluted earnings per share in a range of $2.53 to $2.63.

Management will provide a more detailed discussion of its outlook during the company's earnings conference call webcast.

THIRD QUARTER 2021 WEBCAST

The company will host a webcast to discuss its financial results today, November 2, 2021, at 5:00 p.m. Eastern Time, 4:00 p.m. Central Time. The conference call is being webcast by NASDAQ and can be accessed from Huron's website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter.

USE OF NON-GAAP FINANCIAL MEASURES(8)

In evaluating the company’s financial performance and outlook, management uses EBITDA, adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income from continuing operations, and adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing their business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

Management has provided its outlook regarding adjusted EBITDA and adjusted diluted earnings per share, both of which are non-GAAP financial measures and exclude certain charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items is not provided. Management is unable to provide guidance for these reconciling items because they cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort.

ABOUT HURON

Huron is a global consultancy that collaborates with clients to drive strategic growth, ignite innovation and navigate constant change. Through a combination of strategy, expertise and creativity, we help clients accelerate operational, digital and cultural transformation, enabling the change they need to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve. Learn more at www.huronconsultinggroup.com.

Statements in this press release that are not historical in nature, including those concerning the company’s current expectations about its future results, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” “guidance,” or “outlook” or similar expressions. These forward-looking statements reflect the company's current expectations about future requirements and needs, results, levels of activity, performance, or achievements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: the impact of the COVID-19 pandemic on the economy, our clients and client demand for our services, and our ability to sell and provide services, including the measures taken by governmental authorities and businesses in response to the pandemic, which may cause or contribute to other risks and uncertainties that we face; failure to achieve expected utilization rates, billing rates and the number of revenue-generating professionals; inability to expand or adjust our service offerings in response to market demands; our dependence on renewal of client-based services; dependence on new business and retention of current clients and qualified personnel; failure to maintain third-party provider relationships and strategic alliances; inability to license technology to and from third parties; the impairment of goodwill; various factors related to income and other taxes; difficulties in successfully integrating the businesses we acquire and achieving expected benefits from such acquisitions; risks relating to privacy, information security, and related laws and standards; and a general downturn in market conditions. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, including, among others, those described under “Item 1A. Risk Factors” in Huron's Annual Report on Form 10-K for the year ended December 31, 2020 that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. The company disclaims any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2021

 

2020

 

2021

 

2020

Revenues and reimbursable expenses:

 

 

 

 

 

 

 

Revenues

$

224,007

 

 

$

205,304

 

 

$

657,346

 

 

$

645,780

 

Reimbursable expenses

3,690

 

 

2,860

 

 

8,876

 

 

25,133

 

Total revenues and reimbursable expenses

227,697

 

 

208,164

 

 

666,222

 

 

670,913

 

Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):

 

 

 

 

 

 

 

Direct costs

153,902

 

 

145,459

 

 

463,543

 

 

451,221

 

Amortization of intangible assets and software development costs

910

 

 

1,370

 

 

2,745

 

 

4,005

 

Reimbursable expenses

3,914

 

 

2,840

 

 

9,233

 

 

25,095

 

Total direct costs and reimbursable expenses

158,726

 

 

149,669

 

 

475,521

 

 

480,321

 

Operating expenses and other losses (gains), net:

 

 

 

 

 

 

 

Selling, general and administrative expenses

43,520

 

 

38,561

 

 

128,476

 

 

126,864

 

Restructuring charges

1,677

 

 

59

 

 

3,166

 

 

1,777

 

Litigation and other losses (gains)

56

 

 

 

 

98

 

 

(150

)

Depreciation and amortization

5,412

 

 

6,176

 

 

16,286

 

 

18,483

 

Goodwill impairment charges

 

 

 

 

 

 

59,816

 

Total operating expenses and other losses (gains), net

50,665

 

 

44,796

 

 

148,026

 

 

206,790

 

Operating income (loss)

18,306

 

 

13,699

 

 

42,675

 

 

(16,198

)

Other income (expense), net:

 

 

 

 

 

 

 

Interest expense, net of interest income

(2,217

)

 

(2,259

)

 

(5,965

)

 

(7,516

)

Other income (expense), net

(394

)

 

2,035

 

 

2,177

 

 

687

 

Total other expense, net

(2,611

)

 

(224

)

 

(3,788

)

 

(6,829

)

Income (loss) from continuing operations before taxes

15,695

 

 

13,475

 

 

38,887

 

 

(23,027

)

Income tax expense (benefit)

1,968

 

 

2,388

 

 

6,958

 

 

(5,413

)

Net income (loss) from continuing operations

13,727

 

 

11,087

 

 

31,929

 

 

(17,614

)

Loss from discontinued operations, net of tax

 

 

(29

)

 

 

 

(89

)

Net income (loss)

$

13,727

 

 

$

11,058

 

 

$

31,929

 

 

$

(17,703

)

Net earnings (loss) per basic share:

 

 

 

 

 

 

 

Net income (loss) from continuing operations

$

0.65

 

 

$

0.50

 

 

$

1.48

 

 

$

(0.81

)

Loss from discontinued operations, net of tax

 

 

 

 

 

 

 

Net income (loss)

$

0.65

 

 

$

0.50

 

 

$

1.48

 

 

$

(0.81

)

Net earnings (loss) per diluted share:

 

 

 

 

 

 

 

Net income (loss) from continuing operations

$

0.64

 

 

$

0.50

 

 

$

1.46

 

 

$

(0.81

)

Loss from discontinued operations, net of tax

 

 

 

 

 

 

 

Net income (loss)

$

0.64

 

 

$

0.50

 

 

$

1.46

 

 

$

(0.81

)

Weighted average shares used in calculating earnings (loss) per share:

 

 

 

 

 

 

 

Basic

21,242

 

 

21,905

 

 

21,574

 

 

21,868

 

Diluted

21,531

 

 

22,175

 

 

21,904

 

 

21,868

 

Comprehensive income (loss):

 

 

 

 

 

 

 

Net income (loss)

$

13,727

 

 

$

11,058

 

 

$

31,929

 

 

$

(17,703

)

Foreign currency translation adjustments, net of tax

(246

)

 

381

 

 

236

 

 

(294

)

Unrealized gain (loss) on investment, net of tax

1,158

 

 

4,885

 

 

(2,068

)

 

(1,051

)

Unrealized gain (loss) on cash flow hedging instruments, net of tax

309

 

 

(243

)

 

1,956

 

 

(3,633

)

Other comprehensive income (loss)

1,221

 

 

5,023

 

 

124

 

 

(4,978

)

Comprehensive income (loss)

$

14,948

 

 

$

16,081

 

 

$

32,053

 

 

$

(22,681

)

 

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

September 30,

2021

 

December 31,

2020

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

11,189

 

 

$

67,177

 

Receivables from clients, net

111,548

 

 

87,687

 

Unbilled services, net

94,862

 

 

53,959

 

Income tax receivable

2,120

 

 

5,121

 

Prepaid expenses and other current assets

13,624

 

 

16,569

 

Total current assets

233,343

 

 

230,513

 

Property and equipment, net

30,654

 

 

29,093

 

Deferred income taxes, net

1,726

 

 

4,191

 

Long-term investments

68,216

 

 

71,030

 

Operating lease right-of-use assets

37,367

 

 

39,360

 

Other non-current assets

64,463

 

 

62,068

 

Intangible assets, net

16,663

 

 

20,483

 

Goodwill

597,552

 

 

594,237

 

Total assets

$

1,049,984

 

 

$

1,050,975

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

5,918

 

 

$

648

 

Accrued expenses and other current liabilities

18,520

 

 

14,874

 

Accrued payroll and related benefits

103,526

 

 

133,830

 

Current maturities of long-term debt

555

 

 

499

 

Current maturities of operating lease liabilities

10,066

 

 

8,771

 

Deferred revenues

17,820

 

 

28,247

 

Total current liabilities

156,405

 

 

186,869

 

Non-current liabilities:

 

 

 

Deferred compensation and other liabilities

40,582

 

 

47,131

 

Long-term debt, net of current portion

262,362

 

 

202,780

 

Operating lease liabilities, net of current portion

56,873

 

 

61,825

 

Deferred income taxes, net

394

 

 

428

 

Total non-current liabilities

360,211

 

 

312,164

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 24,377,457 and 25,346,916 shares issued, respectively

238

 

 

246

 

Treasury stock, at cost, 2,457,456 and 2,584,119 shares, respectively

(135,903

)

 

(129,886

)

Additional paid-in capital

409,910

 

 

454,512

 

Retained earnings

245,938

 

 

214,009

 

Accumulated other comprehensive income

13,185

 

 

13,061

 

Total stockholders’ equity

533,368

 

 

551,942

 

Total liabilities and stockholders’ equity

$

1,049,984

 

 

$

1,050,975

 

 

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Nine Months Ended

September 30,

 

2021

 

2020

Cash flows from operating activities:

 

 

 

Net income (loss)

$

31,929

 

 

$

(17,703

)

Adjustments to reconcile net income (loss) to cash flows from operating activities:

 

 

 

Depreciation and amortization

19,245

 

 

22,511

 

Non-cash lease expense

4,912

 

 

5,844

 

Share-based compensation

17,979

 

 

18,559

 

Amortization of debt discount and issuance costs

595

 

 

595

 

Goodwill impairment charges

 

 

59,816

 

Allowances for doubtful accounts

 

 

539

 

Deferred income taxes

2,434

 

 

(16,125

)

Loss on sale of business

 

 

102

 

Change in fair value of contingent consideration liabilities

98

 

 

 

Other, net

(325

)

 

 

Changes in operating assets and liabilities, net of acquisition and divestiture:

 

 

 

(Increase) decrease in receivables from clients, net

(23,294

)

 

23,493

 

(Increase) decrease in unbilled services, net

(40,883

)

 

1,597

 

(Increase) decrease in current income tax receivable / payable, net

3,159

 

 

9,455

 

(Increase) decrease in other assets

98

 

 

(3,426

)

Increase (decrease) in accounts payable and other liabilities

2,229

 

 

(5,272

)

Increase (decrease) in accrued payroll and related benefits

(35,958

)

 

(25,290

)

Increase (decrease) in deferred revenues

(10,424

)

 

3,290

 

Net cash provided by (used in) operating activities

(28,206

)

 

77,985

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment, net

(8,918

)

 

(5,731

)

Purchase of investment securities

 

 

(13,000

)

Investment in life insurance policies

(574

)

 

(2,026

)

Purchase of business

(5,886

)

 

(801

)

Capitalization of internally developed software costs

(3,603

)

 

(6,830

)

Proceeds from sale of property and equipment

255

 

 

 

Net cash used in investing activities

(18,726

)

 

(28,388

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

613

 

 

825

 

Shares redeemed for employee tax withholdings

(9,267

)

 

(7,797

)

Share repurchases

(60,229

)

 

(22,115

)

Proceeds from bank borrowings

189,000

 

 

283,000

 

Repayments of bank borrowings

(129,362

)

 

(240,396

)

Net cash provided by (used in) financing activities

(9,245

)

 

13,517

 

Effect of exchange rate changes on cash

189

 

 

27

 

Net increase (decrease) in cash and cash equivalents

(55,988

)

 

63,141

 

Cash and cash equivalents at beginning of the period

67,177

 

 

11,604

 

Cash and cash equivalents at end of the period

$

11,189

 

 

$

74,745

 

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

 

In conjunction with the company's continuous evaluation of the appropriate level of disaggregation of revenues as the company's business evolves and in consideration of a group hire of approximately 300 employees in the company's Healthcare Managed Services solution within its Healthcare segment in the second quarter of 2021, the company began assessing its operating performance by the following three employee types: billable consultants, full-time equivalents, and Healthcare Managed Services employees. The disaggregation of revenues by employee type previously reported for the three and nine months ended September 30, 2020 was revised below to reflect this change. This change has no impact on the company's consolidated total revenues or total revenues by segment.

 

 

 

Three Months Ended

September 30,

 

Percent

Increase

(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

2021

 

2020

 

Healthcare:

 

 

 

 

 

 

Revenues

 

$

92,845

 

 

$

87,406

 

 

6.2

%

Operating income

 

$

30,255

 

 

$

25,610

 

 

18.1

%

Segment operating income as a percentage of segment revenues

 

32.6

%

 

29.3

%

 

 

Business Advisory:

 

 

 

 

 

 

Revenues

 

$

69,966

 

 

$

66,048

 

 

5.9

%

Operating income

 

$

9,892

 

 

$

10,780

 

 

(8.2

)%

Segment operating income as a percentage of segment revenues

 

14.1

%

 

16.3

%

 

 

Education:

 

 

 

 

 

 

Revenues

 

$

61,196

 

 

$

51,850

 

 

18.0

%

Operating income

 

$

14,788

 

 

$

12,548

 

 

17.9

%

Segment operating income as a percentage of segment revenues

 

24.2

%

 

24.2

%

 

 

Total Company:

 

 

 

 

 

 

Revenues

 

$

224,007

 

 

$

205,304

 

 

9.1

%

Reimbursable expenses

 

3,690

 

 

2,860

 

 

29.0

%

Total revenues and reimbursable expenses

 

$

227,697

 

 

$

208,164

 

 

9.4

%

Statements of Operations reconciliation:

 

 

 

 

 

 

Segment operating income

 

$

54,935

 

 

$

48,938

 

 

12.3

%

Items not allocated at the segment level:

 

 

 

 

 

 

Other operating expenses

 

31,374

 

 

29,042

 

 

8.0

%

Litigation and other losses

 

56

 

 

 

 

N/M

 

Depreciation and amortization

 

5,199

 

 

6,197

 

 

(16.1

)%

Total operating income

 

18,306

 

 

13,699

 

 

33.6

%

Other expense, net

 

(2,611

)

 

(224

)

 

N/M

 

Income from continuing operations before taxes

 

$

15,695

 

 

$

13,475

 

 

16.5

%

Other Operating Data:

 

 

 

 

 

 

Number of billable consultants (at period end) (2):

 

 

 

 

 

 

Healthcare

 

849

 

 

838

 

 

1.3

%

Business Advisory

 

1,179

 

 

1,001

 

 

17.8

%

Education

 

816

 

 

790

 

 

3.3

%

Total

 

2,844

 

 

2,629

 

 

8.2

%

Average number of billable consultants (for the period) (2):

 

 

 

 

 

 

Healthcare

 

802

 

 

844

 

 

 

Business Advisory

 

1,136

 

 

976

 

 

 

Education

 

784

 

 

772

 

 

 

Total

 

2,722

 

 

2,592

 

 

 

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

 

 

 

Three Months Ended

September 30,

Other Operating Data (continued):

 

2021

 

2020

Billable consultant utilization rate (3):

 

 

 

 

Healthcare

 

74.9

%

 

71.4

%

Business Advisory

 

69.0

%

 

72.6

%

Education

 

74.5

%

 

66.5

%

Total

 

72.2

%

 

70.4

%

Billable consultant average billing rate per hour (4):

 

 

 

 

Healthcare

 

$

229

 

 

$

232

 

Business Advisory (5)

 

$

184

 

 

$

186

 

Education

 

$

193

 

 

$

184

 

Total (5)

 

$

200

 

 

$

200

 

Revenue per billable consultant (in thousands):

 

 

 

 

Healthcare

 

$

74

 

 

$

71

 

Business Advisory

 

$

57

 

 

$

64

 

Education

 

$

65

 

 

$

57

 

Total

 

$

64

 

 

$

64

 

Average number of full-time equivalents (for the period) (6):

 

 

 

 

Healthcare

 

149

 

 

191

 

Business Advisory

 

59

 

 

35

 

Education

 

49

 

 

46

 

Total

 

257

 

 

272

 

Revenue per full-time equivalent (in thousands):

 

 

 

 

Healthcare

 

$

133

 

 

$

110

 

Business Advisory

 

$

93

 

 

$

106

 

Education

 

$

203

 

 

$

165

 

Total

 

$

137

 

 

$

119

 

Healthcare Managed Services employees(7):

 

 

 

 

Total revenues (in thousands)

 

$

13,612

 

 

$

6,423

 

Average number of Healthcare Managed Services employees (for the period)

 

485

 

 

88

 

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

 

 

 

Nine Months Ended

September 30,

 

Percent

Increase

(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

2021

 

2020

 

Healthcare:

 

 

 

 

 

 

Revenues

 

$

273,924

 

 

$

268,340

 

 

2.1

%

Operating income

 

$

78,363

 

 

$

70,831

 

 

10.6

%

Segment operating income as a percentage of segment revenues

 

28.6

%

 

26.4

%

 

 

Business Advisory:

 

 

 

 

 

 

Revenues

 

$

213,741

 

 

$

201,423

 

 

6.1

%

Operating income

 

$

37,284

 

 

$

37,306

 

 

(0.1

)%

Segment operating income as a percentage of segment revenues

 

17.4

%

 

18.5

%

 

 

Education:

 

 

 

 

 

 

Revenues

 

$

169,681

 

 

$

176,017

 

 

(3.6

)%

Operating income

 

$

37,211

 

 

$

41,792

 

 

(11.0

)%

Segment operating income as a percentage of segment revenues

 

21.9

%

 

23.7

%

 

 

Total Company:

 

 

 

 

 

 

Revenues

 

$

657,346

 

 

$

645,780

 

 

1.8

%

Reimbursable expenses

 

8,876

 

 

25,133

 

 

(64.7

)%

Total revenues and reimbursable expenses

 

$

666,222

 

 

$

670,913

 

 

(0.7

)%

Statements of Operations reconciliation:

 

 

 

 

 

 

Segment operating income

 

$

152,858

 

 

$

149,929

 

 

2.0

%

Items not allocated at the segment level:

 

 

 

 

 

 

Other operating expenses

 

94,536

 

 

87,826

 

 

7.6

%

Litigation and other losses (gains)

 

98

 

 

(150

)

 

N/M

 

Depreciation and amortization

 

15,549

 

 

18,635

 

 

(16.6

)%

Goodwill impairment charges (1)

 

 

 

59,816

 

 

N/M

 

Total operating income (loss)

 

42,675

 

 

(16,198

)

 

N/M

 

Other expense, net

 

(3,788

)

 

(6,829

)

 

(44.5

)%

Income (loss) from continuing operations before taxes

 

$

38,887

 

 

$

(23,027

)

 

N/M

 

Other Operating Data:

 

 

 

 

 

 

Number of billable consultants (at period end) (2):

 

 

 

 

 

 

Healthcare

 

849

 

 

838

 

 

1.3

%

Business Advisory

 

1,179

 

 

1,001

 

 

17.8

%

Education

 

816

 

 

790

 

 

3.3

%

Total

 

2,844

 

 

2,629

 

 

8.2

%

Average number of billable consultants (for the period) (2):

 

 

 

 

 

 

Healthcare

 

807

 

 

873

 

 

 

Business Advisory

 

1,103

 

 

940

 

 

 

Education

 

750

 

 

779

 

 

 

Total

 

2,660

 

 

2,592

 

 

 

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

 

 

 

Nine Months Ended

September 30,

Other Operating Data (continued):

 

2021

 

2020

Billable consultant utilization rate (3):

 

 

 

 

Healthcare

 

72.7

%

 

70.2

%

Business Advisory

 

69.3

%

 

72.6

%

Education

 

73.3

%

 

71.7

%

Total

 

71.5

%

 

71.5

%

Billable consultant average billing rate per hour (4):

 

 

 

 

Healthcare

 

$

232

 

 

$

218

 

Business Advisory (5)

 

$

191

 

 

$

197

 

Education

 

$

186

 

 

$

189

 

Total (5)

 

$

201

 

 

$

201

 

Revenue per billable consultant (in thousands):

 

 

 

 

Healthcare

 

$

221

 

 

$

203

 

Business Advisory

 

$

182

 

 

$

204

 

Education

 

$

191

 

 

$

194

 

Total

 

$

196

 

 

$

200

 

Average number of full-time equivalents (for the period) (6):

 

 

 

 

Healthcare

 

154

 

 

188

 

Business Advisory

 

50

 

 

27

 

Education

 

41

 

 

56

 

Total

 

245

 

 

271

 

Revenue per full-time equivalent (in thousands):

 

 

 

 

Healthcare

 

$

392

 

 

$

371

 

Business Advisory

 

$

270

 

 

$

370

 

Education

 

$

643

 

 

$

453

 

Total

 

$

410

 

 

$

388

 

Healthcare Managed Services employees(7):

 

 

 

 

Total revenues (in thousands)

 

$

35,409

 

 

$

21,493

 

Average number of Healthcare Managed Services employees (for the period)

 

342

 

 

91

 

 

(1)

The non-cash goodwill impairment charges are not allocated at the segment level because the underlying goodwill asset is reflective of our corporate investment in the segments. We do not include the impact of goodwill impairment charges in our evaluation of segment performance.

(2)

Consists of our consulting professionals who provide consulting services and generate revenues based on the number of hours worked.

(3)

Utilization rate for billable consultants is calculated by dividing the number of hours billable consultants worked on client assignments during a period by the total available working hours for these consultants during the same period, assuming a forty-hour work week, less paid holidays and vacation days.

(4)

Average billing rate per hour for our billable consultants is calculated by dividing revenues for a period by the number of hours worked on client assignments during the same period.

(5)

The Business Advisory segment includes operations of Huron Eurasia India. Absent the impact of Huron Eurasia India, the average billing rate per hour for the Business Advisory segment would have been $200 and $201 for the three months ended September 30, 2021 and 2020, respectively; and $207 and $217 for the nine months ended September 30, 2021 and 2020, respectively.

 

Absent the impact of Huron Eurasia India, Huron's consolidated average billing rate per hour would have been $207 and $206 for the three months ended September 30, 2021 and 2020, respectively; and $208 for both the nine months ended September 30, 2021 and 2020.

(6)

Consists of coaches and their support staff within the Culture and Organizational Excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients.

(7)

Consists of employees who manage and provide revenue cycle billing, collections, insurance verification and change integrity services to our healthcare clients.

N/M - Not Meaningful

 

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS

TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (8)

(In thousands)

(Unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2021

 

2020

 

2021

 

2020

Revenues

$

224,007

 

 

$

205,304

 

 

$

657,346

 

 

$

645,780

 

Net income (loss) from continuing operations

$

13,727

 

 

$

11,087

 

 

$

31,929

 

 

$

(17,614

)

Add back:

 

 

 

 

 

 

 

Income tax expense (benefit)

1,968

 

 

2,388

 

 

6,958

 

 

(5,413

)

Interest expense, net of interest income

2,217

 

 

2,259

 

 

5,965

 

 

7,516

 

Depreciation and amortization

6,534

 

 

7,546

 

 

19,640

 

 

22,488

 

Earnings before interest, taxes, depreciation and amortization (EBITDA) (8)

24,446

 

 

23,280

 

 

64,492

 

 

6,977

 

Add back:

 

 

 

 

 

 

 

Restructuring and other charges

1,677

 

 

59

 

 

3,166

 

 

2,626

 

Litigation and other losses (gains)

56

 

 

 

 

98

 

 

(150

)

Goodwill impairment charges

 

 

 

 

 

 

59,816

 

Loss on sale of business

 

 

 

 

 

 

102

 

Transaction-related expenses

194

 

 

437

 

 

335

 

 

437

 

Foreign currency transaction losses (gains), net

43

 

 

(194

)

 

398

 

 

245

 

Adjusted EBITDA (8)

$

26,416

 

 

$

23,582

 

 

$

68,489

 

 

$

70,053

 

Adjusted EBITDA as a percentage of revenues (8)

11.8

%

 

11.5

%

 

10.4

%

 

10.8

%

 

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS

TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (8)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2021

 

2020

 

2021

 

2020

Net income (loss) from continuing operations

$

13,727

 

 

$

11,087

 

 

$

31,929

 

 

$

(17,614

)

Weighted average shares - diluted

21,531

 

 

22,175

 

 

21,904

 

 

21,868

 

Diluted earnings (loss) per share from continuing operations

$

0.64

 

 

$

0.50

 

 

$

1.46

 

 

$

(0.81

)

Add back:

 

 

 

 

 

 

 

Amortization of intangible assets

2,235

 

 

3,155

 

 

6,923

 

 

9,558

 

Restructuring and other charges

1,677

 

 

59

 

 

3,166

 

 

2,626

 

Litigation and other losses (gains)

56

 

 

 

 

98

 

 

(150

)

Goodwill impairment charges

 

 

 

 

 

 

59,816

 

Loss on sale of business

 

 

 

 

 

 

102

 

Transaction-related expenses

194

 

 

437

 

 

335

 

 

437

 

Tax effect of adjustments

(1,103

)

 

(1,692

)

 

(2,788

)

 

(17,041

)

Total adjustments, net of tax

3,059

 

 

1,959

 

 

7,734

 

 

55,348

 

Adjusted net income from continuing operations (8)

$

16,786

 

 

$

13,046

 

 

$

39,663

 

 

$

37,734

 

Adjusted weighted average shares - diluted (9)

21,531

 

 

22,175

 

 

21,904

 

 

22,207

 

Adjusted diluted earnings per share from continuing operations (8)

$

0.78

 

 

$

0.59

 

 

$

1.81

 

 

$

1.70

 

(8)

In evaluating the company’s financial performance and outlook, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income from continuing operations, and adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing the company's business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

(9)

As the company reported a net loss for the nine months ended September 30, 2020, GAAP diluted weighted average shares outstanding equals the basic weighted average shares outstanding for that period. The non-GAAP adjustments resulted in adjusted net income from continuing operations for the nine months ended September 30, 2020. Therefore, dilutive common stock equivalents have been included in the calculation of adjusted diluted weighted average shares outstanding.

 

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